"Kaesong Industrial Complex on the Brink, Hope Torture Continues into the New Year"

Jeong Gi-seop, President of the Kaesong Industrial Complex Enterprises Association. Photo by Asia Economy DB

[Asia Economy Reporter Moon Hyewon] "They say they are clearing out deep-rooted evils, but why haven't they yet resolved the part of these evils that unjustly infringed on the people's property rights?" (Jung Gisub, Chairman of the Kaesong Industrial Complex Enterprises Association)

"After waiting patiently for four years, we now feel our limits. Due to the sudden closure of the Kaesong Industrial Complex, we barely managed to escape with our lives, and the damage amounts to 14 billion KRW, but we have not even received half of the compensation." (Sung Hyunsang, CEO of Manseon)

Regarding President Moon Jae-in's New Year's address on the 7th, in which he pledged efforts to resume the Kaesong Industrial Complex and Mount Kumgang tourism, the companies operating in Kaesong generally expressed disappointment, saying it "did not contain a clear solution." In an interview with our reporter on the 9th, Jung Gisub, chairman of the Kaesong Industrial Complex Enterprises Association, said, "We understand that our government feels various limitations regarding inter-Korean issues, as it must maintain amicable relations with the United States," but he also expressed frustration, saying, "Ultimately, the parties involved are us, the South and the North. We hope that we can take a more proactive, autonomous, and active approach to find ways to avoid parts that violate additional sanctions imposed after the closure of the Kaesong Industrial Complex."

Jung, who runs S&J, a men's suit manufacturer, appealed for protection of the property rights of resident companies that suffered enormous property damage due to the closure of the Kaesong Industrial Complex. He pointed out, "At the time of the closure, since damage to the people's property rights was inevitable, legislation on compensation should have been enacted first, and the closure should have been carried out according to that law. It was a measure that completely ignored Article 23 of the Constitution, which protects the people's property rights. It makes one question whether this country is truly a nation of law."

According to the Ministry of Unification, the damage amount reported by about 120 resident companies due to the closure of the Kaesong Industrial Complex totals 964.9 billion KRW. A survey conducted by the Small and Medium Business Research Institute in March last year, targeting 108 companies residing in Kaesong, asked about their intention to re-enter the complex in the future. The percentage of those who said they would "unconditionally re-enter" (56.5%) more than doubled compared to the same month in 2018 (26.7%).

However, 66.7% of the responding companies cited "establishing legal grounds for state loss compensation" as a prerequisite for restarting the Kaesong Industrial Complex. Sung Hyunsang, CEO of Manseon, who had been in the complex for 10 years, said, "We live in the international community, so we must not violate UN sanctions; it is an unavoidable situation. But within that framework, we should not remain trapped and let diplomatic issues be resolved passively." He added, "I believe President Moon has the will to resolve the issues of resuming Kaesong and Mount Kumgang tourism within the scope that does not violate UN sanctions."

Manseon, a school uniform supplier, was a place where CEO Sung and his staff barely escaped with their lives, leaving behind 80,000 school uniforms due to the sudden closure of the Kaesong Industrial Complex in 2016. According to CEO Sung, the damage amounts to about 14 billion KRW based on investment assets.

A representative of a company residing in the Kaesong Industrial Complex said, "Due to the accumulated damage during the four-year suspension of the Kaesong Industrial Complex, businesspeople are living each day feeling as if they are on the edge of a cliff," and appealed, "We urgently need the government's substantial and extraordinary support measures to save us."